Press Release

VIS Upgrades Entity Ratings of House Building Finance Company Limited

Karachi, June 04, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of House Building Finance Company Limited (‘HBFC’ or ‘the DFI’) to ‘AAA/A-1+’ (Triple A /A-One Plus) from ‘AA-/A-1+’ (Double A Minus/A-One Plus). The medium to long-term rating of ‘AAA’ denotes highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s debt. The short-term rating of ‘A-1+’ denotes highest certainty of timely payment; Short-term liquidity, including internal operating factors and /or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 7, 2023.

HBFC is a Development Finance Institution (DFI) engaged in financing for construction and purchase of houses. The DFI was established in 1952 by the Government of Pakistan (GoP). It was corporatized in 2006 and is now an unlisted public limited company. At present, the DFI is listed for active privatization under the current program of the Government of Pakistan (GoP). Invitation for expression of interest was published by the Privatization Commission, Ministry of Privatization on Dec 26, 2021. Following this, due diligence has been completed by a prospective buyer and a share purchase agreement is on the anvil.

Assigned ratings take into account sovereign ownership of HBFC and historically demonstrated track record of financial support by the Government. On a standalone basis, the institution operates with minimum net risk on its balance sheet. The relatively high gross infection pertains to a legacy portfolio and no incremental infection has been observed over the recent 3-year period (2021-23). Net infection is low. Moreover, IFRS 9 has been implemented which gives confidence that the portfolio is adequately provided.

A boost to profitability in 2023, stemmed from higher treasury earnings and controlled overheads. As interest rates reverse, the potential for treasury earnings may decline; however, profitability indicators remain strong even on a sensitized basis. As of Mar’24, HBFC's profitability metrics improved further compared to the previous year. HBFC’s Capital Adequacy Ratio (CAR) remains significantly above the minimum requirement set by the financial regulatory authorities and VIS benchmarks. Liquidity Coverage Ratio (LCR) also increased significantly in 2023. The quantum of liquid assets to liabilities remains high and compares favorably to peers. Additionally, our view on HBFC’s liquidity profile is supported by asset maturities that sufficiently cover the maturing liabilities.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

Applicable Rating Criteria:
Government Supported Entities
VIS Issue/Issuer Rating Scale

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